Roi of ergonomic improvements

ROI of Ergonomic Improvements: Demonstrating Value to the Business

© 2012 Humantech, Inc.

The 30-Inch View ®


Winnie Ip, CPE

Director of Consulting



Agenda Topics

● Introduction

● Cost Justification Methods

• Regulatory Compliance

• Health and Safety Performance

• Production Enhancement

● Creating Business Value

● Calculating ROI

● Summary and Question Period



Why Are We Here?

● Tough times

● Save money

● Weather the storm

● Measurable gains

● Demonstrate value

● Stay on course

● Reduce costs

● Cash is king



Designing for Human Performance Ergonomics

● If we design workstations within the limits of human

performance, we will…

• Eliminate work-related musculoskeletal disorders

• Maximize productivity

• Enhance process stability and product quality



● Ergonomics is an Engineering issue, not a

Health & Safety Issue.

• The majority of ergonomic issues are typically

rooted in process and workstation design.

• Ergonomic issues only become Health &

Safety concerns once an injury has occurred.

• Long-term fixes for ergonomic issues are

typically related to engineering controls.

Introduction Why Does Everyone Need to be Involved?



The Ergonomics Maturity Curve™

EHS &

Medical

Engineers / Designers

EHS / Lean / CI

EHS & Human

Resources



Agenda Topics

● Introduction






● Calculating ROI




Regulatory Compliance • Regulatory Compliance

• Health & Safety Performance


● U.S. Standards

• Federal OSHA

• General Duty Clause

"every employer must provide a safe working

environment for their employees"

● OSHA approved state plans

• California State Ergonomics Rule

● Outside U.S. Standards

• European Union Directives

• Non-European Union country standards



Regulatory Compliance

● Why it’s not effective:

• If your site’s incidence

rates are below industry

standards, management

may believe that they are

in a “no or low” risk

situation for non-

compliance.

● Let’s consider another

approach…




(Source: BLS, 2001)



Health and Safety Performance • Regulatory Compliance



Average Costs of WMSD Incidents



$4 TO $10 INDIRECT COSTS

$1 • Building damage

• Tool and equipment damage

• Product and material damage

• Production delays and

interruptions

• Legal expenses

• Expenditure of emergency

supplies

• Interim equipment rentals

2003 SALCON, Inc. All Rights Reserved

• Investigation time

• Wages paid for time lost

• Cost of hiring and/or training

replacements

• Overtime

• Extra supervisory time

• Clerical time

• Decreased output of injured

worker upon return

• Loss of business and goodwill

INJURY & ILLNESS COSTS

• Medical • Compensation Costs (Insured Costs)

Incident Cost Iceberg • Regulatory Compliance





Health & Safety • Regulatory Compliance



● Why it’s not effective:

• If there are no previous

injuries, management may

not see the urgency to

improve the job

● Let’s consider yet another

approach…

There were ergonomic issues when reaching to a

torque wrench in this assembly operation.



Production Enhancements

● Ergonomic improvements are more likely to be

supported and accelerated if they can fit into a cost

justification process.

● Leads to cost savings in many areas including:

• Quality

• Delivery

• Production (measured at the workstation level)

• Elimination of non-value-added tasks

• Reduction in motion waste






Quality Improvements

● Cell re-design project for

drill process

● Chipped blank = $30,000

revenue loss

● Installed an articulating arm

to transfer lens blanks






Delivery Improvements

Fender Finishing Operation

• 30 minute cycle time

• Awkward postures (> 28” reach)

• Multiple handling (24 lifts/cycle)

• High scrap rate

• Built freestanding fixture and

redesigned workstation

• Reduced reaches (< 15”)

• Reduced handling (2 lifts/cycle)

• Reduced scrap by 83%

• Reduced cycle time by 50%




2002 ErgoCup Winner

Applied Ergonomics Conference

Baltimore, MD

http://www.ohio.honda.com/index.cfm



● Introduction






● Calculating ROI


Agenda Topics



● How are companies achieving ergonomics excellence?

• Key activities

• Communications

• Tools and training

Creating Business Value



2007, 2009, and 2011 Benchmarking Studies

● Involved large companies in:

• Aerospace

• Automotive

• Health care products

• Diversified products

• Computer systems

• Semiconductors

● Looked at:

• Methods

• Roles

• Training

• Metrics

• Construction equipment

• Industrial products

• Pharmaceutical

• Aluminum products

• Steel products



Ergonomics Excellence - What to Expect



Benchmarking Study: Success Metrics

Leading Indicators

Measures that describe the prevention of future incidents include:

● Percent of job conditions with medium or high ergonomic risk

● Number of countermeasures implemented

● Ergonomic risk reduction

● Conformance of new equipment with ergonomic design criteria



Process Characteristics

● “C” level support and sponsorship

● Management system in place

• Policy & Guidance Document

• Clear roles and responsibilities

• Accountability for metrics at all levels in organisation

● Data driven with the focus on risk management

● Heavy on engineering and workplace improvement

● Engage the workforce in the process

● Integrated with other company initiatives

● VISIBLE demonstration of value to the business



Ergonomics Risk Management – Visible Change



Ergonomics Risk Management – Visible Change



Lean/Continuous Improvement – Data Driven



● 23 sites have implemented

process

● All facilities trained in

ergonomics process and tools

● Over 3,600 workplace

improvements in place

● 2 year Total Incident Rate

(TIR) reduction:

• 67% EU

• 48% NA tire

• 55% Globally

111.0

97.0

58.0

0

50

100

150

Q1-05 Q1-06 Q1-07

Ba

se

lin

e

Creating Business Value - Example



● IR & WC Costs Decrease as Ergonomics Is “Designed In”

Creating Business Value - Example

1999 2000 2001 2002 2003 2004 2005 2006 2007

ESI

Project

Ergo

Guideline

Ergo in

DA

Incident Rate Camry Solara Avalon Camry

Workers

Compensation



The Ergonomics Maturity Curve™

EHS &

Medical

Engineers / Designers

EHS / Lean / CI

EHS & Human

Resources



● Using Digital Assembly

• Clearance, Reach, Fit, Posture can be

checked for each part and process

Product Design



● Introduction






● Calculating ROI


Agenda Topics



Business Reality 101

● In today’s business climate any initiative that does not

deliver measurable value is an option.

● Ergonomic improvements are more likely to be supported

and accelerated if they can fit into a cost justification

process.

● Time can be converted to money



Ergonomic Projects that Result in ROI

● Are effective in reducing hazard exposures

• Eliminate risk

• Engineering controls

• Administrative controls

• Work practices

● Are efficient in reducing hazard exposures

• Start with low cost/high impact



Cost Justification

● In the manufacturing environment time is the dominant

currency.

● And we know that awkward postures, high forces and

repetitive movements take more time to complete.

● The challenge is quantifying financial benefit of

reducing force, frequency and posture.



Motion Waste – Reaching and Walking



Motion Waste – Reaching and Walking



Time Penalties for Reaching

● The STEP methodology uses reach

arcs to define 5 zones

● Each reach zone is separated by a

6" (15 cm) increment

● Time penalties for each reach zone

vary by 0.2 seconds each and are

based on round-trip movements

● Other data you’ll need:

• Time savings per cycle

• # of cycles per hour

• Burdened labour costs

• Current production and quality numbers



Time Penalties for Reaching - Example



Time Penalties for Walking

● Time savings are assigned for each

step eliminated for walking tasks.

● The first step, using to begin

walking, corresponds to 0.8

seconds time penalty.

● Subsequent steps correspond to 0.5

seconds each.



2

1

3

4

5

6 7

8 9 10

Time Penalties for Walking – Example

● BEFORE: Poor Layout

• Lack of continuous product flow

• Excessive walking with product

Current OQA/FQA Area Layout



Time Penalties for Walking - Example

● AFTER:

• "U" – shaped work cells

• Improved product flow

• Reduced prolonged/

multiple handling

• Motion savings = 34.8

seconds/cycle

New OQA/FQA Area Layout



Check the Effects - Calculating Ergonomics ROI



Cost Justification – An Example

● There were ergonomic issues when reaching to a

torque wrench in this assembly operation. Because

there was no previous injury, management didn’t see

the urgency to improve the job.







● After brainstorming, the ergonomics team came up

with several solutions

● Short term solutions

• Move bins closer

• Relocate tool lower

● Long term solution

• Self-feeding driver




• The ergonomics team was able

to illustrate a 0.4 second time

savings that would result by

lowering the tool, in addition to

improved working postures

• In addition, the screw bin was

relocated closer resulting in an

additional 0.4 second time

savings.

• Cost: $0

Before

After

0.4 seconds saved

Short term solution: Relocate driver and parts bin closer




Reduce time on tasks by 0.8 seconds

Total time savings = 32 minutes/shift




• The ergonomics team wanted

to continue with improving the

job and investigated installing a

self-feeding driver

• Cost: $2,500

Long term solution: Self-feeding driver




Eliminate 3 tasks = 3.2 Seconds

Total time savings = 128 minutes/shift




● Self-Feeding Driver

• Elimination of 3 non-value-added tasks saves a

total of 3.2 seconds

• Cycle time is 12 seconds





• Conservative productivity impact is 17%

• Direct labor cost = $29,000 / year

• Benefits burden = 25%

• Cost of the improvement = $2,500

= 17% (productivity impact) x $36,250 (annual direct cost)

= $6,162

= $2,500 (cost of improvement)

$6,162 (annual savings)

= 0.4 years (4.8 months)



Calculating Return on Investment

3-Year ROI = 3-Year Savings – Initial Investment

Initial Investment X 100%


• Annual savings = $6,162

• Cost of the improvement = $2,500

3-Year ROI = (3 x $6,162) – $2,500

$2,500 X 100%

= 639%




• The ergonomics team wanted to

continue with improving the job

and investigated installing a self-

feeding driver

• Cost: $2,500

• Payback is less than 4 months!

• 3-year ROI of 639%

Long term solution: Self-feeding driver



● Introduction






● Calculating ROI


Agenda Topics



What Have We Learned?

● In today’s business climate any initiative that does not

deliver measurable value is an option.

● Ergonomics is an engineering issue, not a safety issue

● Most effective way of cost justifying ergonomic

improvements is through production enhancements

(quality, delivery, productivity)

● Engage all levels of the organization (management,

union, engineering, design, procurement)

● Critical elements for success:

• Risk based. Data driven.

• Focus on engineering controls.

• Cost justification and Return on Investment are key.



Winnie Ip, CPE

Director of Consulting 734.663.3330 x147

[email protected]

Thank you!

ROI of Ergonomic Improvements

Healthcare

Roi of ergonomic improvements